The AUDUSD pair experiences a rapid decline and approaches its lowest level in nearly two months, reaching around 0.6500, due to the US Dollar’s strength and China’s weak economic growth.

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• AUD/USD cracks swiftly to near a two-month low around 0.6500 amid strength in the US Dollar and China’s bleak economic growth.

The pair currently trades last at 0.65116.

The previous day high was 0.6593 while the previous day low was 0.6555. The daily 38.2% Fib levels comes at 0.6579, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.657, expected to provide resistance.

The AUD/USD pair witnesses a sharp correction amid strength in the US Dollar Index (DXY) and a weakness in China’s business with other nations. The Aussie asset cracks to near a two-month low around 0.6500 and is expected to continue its downside momentum amid caution ahead of a busy economic calendar.

S&P500 futures extend losses in the European session, portraying a buildup of caution among market participants ahead of the United States Consumer Price Index (CPI) data, which will be published on Thursday. The US Dollar Index climbs above the 102.40 resistance as investors hope for stubbornness in CPI’s July reading due to a recovery in global oil prices.

Oil price recovery would elevate gasoline prices and the contribution of cheap oil to consistently softening headline price pressures would start fading. As per the estimates, annualized headline inflation is expected to bounce back to 3.3% vs. the former release of 3.0%. This would ease hopes of no more interest rate hikes from the Federal Reserve (Fed) by the year-end.

But before that, investors will focus on China’s inflation data, which will be released on Wednesday at 01:30 GMT. Monthly CPI is expected to deliver a stagnant performance against a deflation of 0.2%. On an annual basis, inflation is expected to report a deflation by 0.5% against a neutral figure. Producer Price Index (PPI) would continue to remain in the deflation territory, however, the pace of would ease to -4% against the former release of -5.4%.

The Chinese economy struggles to push inflation higher despite monetary and fiscal stimulus due to weak domestic demand and vulnerable exports. It is worth noting that Australia is the leading trading partner of China and weak economic prospects in China impact the Australian Dollar.

Technical Levels: Supports and Resistances

AUDUSD currently trading at 0.6514 at the time of writing. Pair opened at 0.6574 and is trading with a change of -0.91 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 0.6716, 50 SMA 0.6702, 100 SMA @ 0.6688 and 200 SMA @ 0.6734.

The previous day high was 0.6593 while the previous day low was 0.6555. The daily 38.2% Fib levels comes at 0.6579, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.657, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.6555, 0.6536, 0.6517
• Pivot resistance is noted at 0.6593, 0.6612, 0.663

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